The objective of this project is to address the questions listed below.
◗ How do household characteristics—for example household size, the age structure of children, health status, and labour market activity—affect a household’s propensity to report experiencing financial stress?
◗ How do these relationships change as one moves up the income scale (say from low to middle to high income)?
◗ How sensitive are these results to the way in which we measure financial stress? Answers to these questions are important in identifying vulnerable groups within Australian society and will be informative about any potential changes in payments within the social security system.
The outline of the report is as follows. In Section 2 we discuss the Household Income and Labour Dynamics in Australia (HILDA) data used in this project. Following that, the incidence of financial stress is compared across family types and income quintiles. Several different measures of financial stress will be considered. In Section 4 we use multivariate regression techniques to assess the way in which the incidence of financial stress varies across different household characteristics. Equivalence scales derived from our financial stress measures are discussed in Section 5, while Section 6 discusses some tentative policy conclusions.